Anyone who oversimplifies this process is only kidding you and themselves. Many entrepreneurs waste a lot of time looking in the wrong place for financing that would be best suited to their company’s circumstances.

With a bad economy many "financial experts" come out of the woodwork as they see the opportunity to make money off of the situation. Unfortunately it also means they have little, if any, experience in getting deals done, much less tough deals, much less an understanding of how important positioning the company is. The problem is the deal won’t get done if you don’t take all the components into account. Let’s talk about:

In part it includes:

Who has money to loan today (this changes daily)?

This begins to narrow down the field of possibilities, but more needs to be done. Once the above elements are answered and blended together, you begin to see how every situation is unique. Now armed with the first part of the formula specific to your company, you need to develop the second half.

What kind of money is appropriate for your situation

The refinement process goes on… If you are not in touch with this on a daily basis, you will have no idea of where to look much less why to look there. Most financing is done by default and a little luck of getting to someone who is willing to lend money because it is to their advantage, not because it is in your best interest.

Fortunately not only can we narrow this field down immensely, we can actually assist you in positioning your company to qualify for better rates and funding then you would have otherwise had available to you. In much the same way we can improve the presentation of the package for the lender, we can improve the way the business looks to the lender. This dramatically increases your chances for securing financing and can give you much better terms as well. It’s a lot like washing, waxing and fixing the small stuff on your car before you attempt to sell it.

Creativity Is Very Important

Another important factor in securing the best possible financing is to stay creative when looking for a solution. There have been many finance packages put together by our firm, which would never have happened if they weren’t approached “out of the box” and creatively. This is sometimes a hard lesson to learn for many entrepreneurs since they are only familiar with the standard banking approach or perhaps a leasing company.

Has your business been hard or impossible to finance? There are many creative financing solutions available to small and medium sized businesses that escape the vast majority of business owners. This is a very specialized area of finance and almost always takes an expert to negotiate through the maze of possibilities. This does not mean that it needs to be expensive financing, in fact since when we work for the client our goal is to obtain the cheapest solutions available and have many times succeeded in securing interest free money.

Most of us are under the impression that we should be able to walk into our bank and get a loan for our business to help out our cash flow crunch. The truth is that anyone who lends money looks at two criteria above everything else. First is how good and strong is your cash flow (woops)? They like to see a ration of at least at 1.2, or 20% over our total cash flow requirements. For example if your expenses are $10,000 per month, they want to see $12,000 per month of available cash flow including your new debt payment. Secondly, what is the collateral worth at worst case scenario (auction), should you not be able to make the payments. This can vary depending on the type of collateral such as real estate, machinery, accounts receivable or inventory. However it is usually very conservative. Without BOTH of these ingredients there is no deal.

The problem is that we usually need help immediately, not months from now. At Investor Direct Funding we can many times provide relief within a week or two. For me it took going in and out of 46 banks over roughly a year to get my first equipment loan trying to do it myself. Each time I had to change something in my proposal or business plan to adjust for my most recent bank rejection. I also had to eliminate the “deal killers” as I went. Finally I did get the loan, but more lasting was the valuable lesson I received in the process. I learned what banks wanted to see and also what they wouldn’t accept.

Banks don’t make it easy by telling you what is keeping you from getting a loan. After all, this is their job security versus your needs. If they make a good loan they are doing their job, if they make a bad loan they have failed to do their job. That means they can’t take anything you say at face value, so they start to look for problems. Where will this deal fall apart? Banks are businesses just like our own business, in business to make a profit and take little or no risk in the process. We wouldn’t do business with a client who we were pretty sure couldn’t pay the bill, right? If a new client approached us and said, “I don’t have enough money to pay for this material now, but if you give it to me anyway I can do the work and bill my customer and then I’ll have enough to pay you.” Hum, that’s a bit risky. Now we might do it if we were “hungry” enough for the work, but it is not a real sound business decision to do so. A bank has guidelines already in place to keep the “hungry” loan officer in line and protect the bank’s best interest.

Investor Direct Funding has relationships with traditional resources in addition to a whole lot of creative solutions at much cheaper rates. The first trick is to know which resource will accept the particular circumstances your company represents, so that you are presenting the right situation to the right lender. The next trick is to know which scenarios will send any resource running from you and realize that presenting with those problems in place is simply a waste of time. Much of Investor Direct Funding’s business comes from companies with some kind of financial issue, in these circumstances one needs to know how to clean up those problems and eliminate them before you present the opportunity to a resource. This is where we excel.

Finally, once you understand how the situation needs to be handled, we look for the cheapest solution to the problem. The problem with borrowing is that you take debts that are too much to pay and roll them into a new debt that is still too much to pay. Many times it is possible to reduce the amount owed whether it is a vendor, judgment holder, landlord, taxing authority or other obligation of the company. Many of our clientele are on COD or completely cut off from their suppliers. This just adds to the cash flow nightmare. We have solutions to establishing new credit in these situations as well, which is a must if you want to keep producing.

As you can see, this requires the ability to read the entire situation, make some quick changes and adjustments and find the least expensive combination of financing or refinancing available under your company’s circumstances. For a free consultation on the possibilities that may be available to you, click on the “Pre-Qualification Form” tab on the top of the home page. Fill out the profile information about your company and someone from our offices will contact you and let you know if we see a possibility for your business. Either way this is a free consultation, but if you would prefer you may call us at 1-866-568-6455 or email to info@investordirectfunding.us.